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Asda Leads Paid Search Advertising in U.K. Online Supermarket Wars

Tesco’s new same-day grocery pickup service is the latest escalation in an apparent online supermarket war in the U.K., which began in June when Amazon launched its Amazon Fresh grocery delivery service in select postcodes of London. Sainsbury’s followed suit in July with a same-day delivery test of its own, as part of a larger initiative to adapt to consumers’ growing multi-channel/online shopping preferences.

Although the race to capture the U.K. online grocery market began to heat up only in recent months, AdGooroo has uncovered a clear leader in paid search advertising this year—Asda.

To assess paid search advertising for the U.K. grocery industry, we examined Google.co.uk desktop text ad clicks on 83 branded and non-branded online grocery-related keywords from January through August 2016.

The above chart shows Walmart-owned Asda with a commanding lead in the category, generating nearly 5.8 million clicks during the first 8 months of 2016, followed by Waitrose (3.3 million clicks), which promotes itself as “championing British” food ingredients, Tesco (2 million clicks), Morrisons (1.2 million clicks) and Ocado (1.1 million clicks), which describes itself as “the world’s largest dedicated online grocery retailer”.

Ranking a distant sixth in the category, Sainsbury’s generated a little more than 230,000 clicks from January through August, far less than its fellow ‘Big Four’ U.K. supermarket chains Asda, Tesco and Morrisons.

In total, paid search ad spend on the branded and unbranded grocery keywords grew by 39% year over year, increasing from £3.1 million in January through August 2015 to £4.3 million during the same period in 2016.

Branded Keywords Are Vital (And Fair Game for Competitors)

Notably, 98% of clicks generated by the grocery retailers in the above chart came from ads served on each company’s branded keywords, indicating that brand awareness and preference play a strong role in a successful paid search advertising campaign for the U.K. grocery industry. However, it’s not just the individual brands who are sponsoring their own branded keywords. As indicated in the following chart, the top supermarket brands are competing on their own brand terms with multiple advertisers:

Tesco Leads in Clicks on Online Grocery Delivery Keywords

Looking at a different view of the category, we removed branded keywords from the study and examined a more narrow set of 38 non-branded keywords that are focused on online grocery delivery such as ‘online grocery shopping’ and ‘grocery delivery’.

Although such keywords generated far fewer clicks than grocery retailers’ branded keywords, they may provide insight into which retailers are more focused on engaging consumers who are actively using the search engines to find online grocery delivery services—the primary battleground in the current supermarket wars that began this summer.

While Asda is the dominant player in the grocery category based on total paid search clicks, the retailer faced closer competition on the 38 online grocery keywords. In fact, from January through August Tesco led the field, driving 19% of all clicks on the 38 online grocery keywords, followed by the smaller U.K. supermarket chain Iceland (14.8%), then Asda (12.4%), Ocado (11.5%) and Sainsbury’s (10.8%).

Paid search ad spend on the online grocery delivery keywords have grown by 63% this year, from £46,000 in January through August 2015 to £75,000 during the same months of 2016.

Amazon Lagging, But for How Long?

Although seen as a catalyst in the current online supermarket wars, Amazon was not a significant advertiser on either the 83 branded and non-branded keywords or the 38 online grocery-specific keywords we examined in the first eight months of the year. The retailer’s UK website, amazon.uk.co, generated just 16,500 clicks on the branded/non-branded keyword group compared to the millions of clicks generated by the Top 5 advertisers in the category. In addition, Amazon garnered a 1.2% click share on the online grocery delivery keyword group from January through August, compared to the double digit click share gained by each of the Top 5 advertisers during the period.

Of course, there could be any number of explanations for Amazon’s lack of activity on the grocery-related keywords we examined. For instance, the retailer may not have been concentrating on this area of its U.K. paid search program due to the limited nature of its online grocery delivery service, which is currently available only in certain sections of London. Whatever the case, Amazon’s current absence may leave an opportunity for its traditional supermarket rivals to gain a foothold with online U.K. grocery shoppers before the online retail giant turns its attention—and considerable paid search advertising resources—to this area of its business.

Note: The results of this report are based on the keywords indicated in the report. Advertisers may be sponsoring additional keywords that, if measured, would alter the findings of this report.